Successful Financial Year 2023

• Sales of CHF 1 418.6 million in the 2023 financial year
• Order intake of CHF 541.8 million in the 2023 financial year; order backlog of around CHF 650 million as of December 31, 2023
• EBIT margin of 7.2%
• “Next Level” performance program on track
• Proposed dividend of CHF 3.00 per share
• Outlook 2024 with sales of around CHF 1 billion

With somewhat lower sales of CHF 1 418.6 million (2022: CHF 1 510.9 million), down 6% from the previous year, the Rieter Group concluded the 2023 fiscal year. As anticipated, the amount of orders received, CHF 541.8 million, was significantly less than that of the same period in the previous year (2022: CHF 1 157.3 million). Despite difficult business conditions, Rieter produced an EBIT margin of 7.2%. The “Next Level” performance program is being implemented to boost profitability, and everything are going as planned.

Sales segmented by business unit

Sales for the Business Group Machines & Systems came to CHF 965.0 million in 2022, down 7% from CHF 1 034.7 million the year before. Sales in the Business Group Components decreased to CHF 266.2 million in 2022 from CHF 303.5 million in the same time the previous year, a 12% decrease. Sales for the Business Group After Sales came in at CHF 187.4 million, up 9% from CHF 172.7 million in 2022.

Order receipt

As anticipated, the 2023 order intake of CHF 541.8 million was significantly less than the CHF 1,157.3 million from the previous year. The current state of the market is marked by a lack of investment due to geopolitical uncertainty, increased financing costs, and reluctance on the part of consumers in significant countries. Demand was stronger in the second half of 2023, according to Rieter. Project commitments, however, have not yet come to pass.

Backlog of orders

The company’s order backlog stood at around CHF 650 million by the end of 2023 (December 31, 2022: CHF 1 540 million).

EBIT, net profit and free cash flow

Profit at the EBIT level in the year under review was CHF 101.7 million (2022: CHF 32.2 million), which represents an EBIT margin of 7.2%. This significant improvement was mainly due to falling logistics costs, higher margins on the order backlog, and lower production costs. EBIT also includes the non-recurring profit of CHF 72.5 million from the sale of land in Winterthur, as well as restructuring costs and impairment losses of CHF -54.6 million, primarily attributable to the “Next Level” performance program.

Rieter closed the 2023 financial year with a net profit of CHF 74.0 million (2022: CHF 12.1 million). This represents an increase of 512% compared to the previous year.

Free cash flow amounted to CHF 118.7 million (2022: CHF -98.6 million), mainly due to proceeds from the sale of land in Winterthur (CHF 89.1 million) and operating performance. Thanks to this positive free cash flow, net debt was significantly reduced to CHF 191.2 million (2022: CHF 285.6 million). As of December 31, 2023, Rieter had liquid funds of CHF 135.9 million (2022: CHF 176.1 million).

The equity ratio as of December 31, 2023, was 28.8%, mainly due to the reduced working capital and lower financial debt (previous year’s reporting date 23.4%).

“Next Level” performance program on track

Rieter is working diligently to implement the measures set out in the “Next Level” performance program. This includes strengthening sales excellence, sharpening customer focus, and improving efficiency and quality in production. Rieter is also pursuing growth in the after-sales and components business to achieve a more balanced mix between the business groups. At the same time, the transfer of resources and responsibilities to India and China is intended to enable the key markets to be more agile in responding to customer needs and cycles in the machinery business.

Overhead structures were optimized, and production capacities were adjusted substantially in the 2023 financial year. The closure of the Ingolstadt site was almost complete by the end of the reporting year.

Innovation program

At ITMA 2023 in Milan (Italy) and in Shanghai (China), Rieter presented solutions in the areas of digitization, automation and the circular economy. The new air-jet spinning machine J 70 made its debut at ITMA and met with great interest from customers. In the 2023 financial year, Rieter invested around CHF 76.8 million or around 5.4% of Group sales in research and development.

New Campus in Winterthur

The sale process for the Rieter site in Winterthur (Switzerland) was successfully completed. The land, with a total area of approximately 75,000 m², was sold to Allreal Group for CHF 96 million.

Rieter will move into the Campus as its new corporate headquarters in Winterthur in summer 2024. The company is concentrating its expertise in this innovation hub, which houses the most modern Spin Center of its kind. The focus of development is on automation, digitization and artificial intelligence, in order to allow Rieter customers to fully exploit the potential of their spinning mills.

Dividend

The Board of Directors proposes to the shareholders the distribution of a dividend of CHF 3.00 per share for 2023. This corresponds to a payout ratio of 18.2%. In view of the net debt of CHF 191.2 million and the equity ratio of 28.8%, the motion of the Board of Directors for the appropriation of retained earnings is in line with Rieter’s responsible dividend policy, which is based on a solid balance sheet structure.

Sustainability

For the first time, the topic of sustainability is an integral part of the 2023 Annual Report. The report on non-financial matters highlights the progress Rieter has made in addressing environmental, social and corporate governance issues.

Further significant progress was made, especially in relation to the environmental goals in the “Planet” area, including greenhouse gas emissions, waste and recycling. In the “People” area, Rieter recorded improvements in social sustainability by increasing the proportion of women in management and in occupational safety.

Board of Directors and Annual General Meeting

At the 132nd Annual General Meeting held on April 20, 2023, the shareholders approved all motions proposed by the Board of Directors. The Chairman of the Board, Bernhard Jucker, and the Directors, Hans-Peter Schwald, Peter Spuhler, Roger Baillod, Carl Illi, Sarah Kreienbühl and Daniel Grieder were confirmed for a further one-year term of office. Thomas Oetterli was newly elected to the Board of Directors for a term of office. The members of the Remuneration Committee who were standing for election – Hans-Peter Schwald, Bernhard Jucker and Sarah Kreienbühl – were likewise re-elected for a one-year term of office.

Outlook 2024 with sales of around CHF 1 billion

Markets remain under pressure from the economic slowdown, high inflation rates and noticeably dampened consumer sentiment. Customers are reluctant to place orders due to financing challenges. The first signs of a recovery in the 2024 financial year have emerged in the key markets of China and India. Rieter expects demand to increase in the coming months.